Leak 24 · Inventory & Working Capital - Inventory duplicated across branches
Five branches each hold three months of a slow item. The company holds fifteen months. Each branch manager is being sensible.
Diagnostic note. Symptoms, required records, an initial check, and possible fixes. This shorter note does not include a full worked example.
What is it?
When every branch stocks every item, safety stock multiplies. For fast items that may be right. For slow and mid-velocity items, one or two stocking locations with next-day transfer would serve customers just as well with a fraction of the inventory. Branch-level replenishment makes the decision locally, and nobody sees the total.
- Family
- Inventory & Working Capital
- Primary owner
- Inventory Manager
- Secondary owners
- Branch Managers, CFO
- Primary impact
- Working capital
- Typical data source
- ERP inventory by branch, demand by branch
- Detection difficulty
- 30-day measurability
Ask yourself
For slow items, do you know how many branches stock them, and whether one central location would serve the same customers?
Yes, partially, no, or don’t know. “Don’t know” is the most useful answer, because it points at the test below.
What does it look like?
Warning signs. None of these proves the leak exists. They tell you where to look.
- Items stocked in every branch with low demand in most of them.
- Total company months of supply far above any branch’s months of supply.
- Branches unaware that another branch has excess of what they are ordering.
What data do I need?
The minimum viable set. Most of it is already in your ERP.
| Field |
|---|
| On-hand by item and branch |
| Demand by item and branch for 12 months |
| Transfer cost and lead time between branches |
The initial check
Start with a small sample. Gathering the exports, agreements, or observations is separate from running the check; agree that work with the person who owns the records.
- 1Export on-hand and 12-month demand by item and branch.
- 2For items stocked in three or more branches, calculate company-wide months of supply.
- 3Sum the value of items where company months of supply exceeds 12 and no single branch sells more than a few units a month.
Duplication excess = Σ (company on-hand − demand-justified central stock) × unit cost, for multi-branch slow items
Then ask one question: Which of these items could be stocked in one place with next-day transfer and no customer noticing?
How much could it be costing us?
A conservative range, not a headline. The goal is a number management can trust enough to investigate.
Duplication excess value × carrying cost rate, net of additional transfer cost
Common root causes
Fixes fall into three layers. Not every problem needs software, and almost none needs AI first.
- Process
- Replenishment decided branch by branch with no network view.
- Data
- No stocking-location strategy recorded on the item.
- Technology
- The ERP replenishes each branch independently and does not check other branches’ stock first.
What should we do?
Start with the simplest intervention that could solve it. Move down the list only if the one above is not enough.
Level 1
Visibility
A network-level months-of-supply report by item.
Level 2
Policy
Stocking-location rules by item class: which items every branch stocks and which are central.
Level 3
Workflow
Replenishment checks other branches for excess before raising a supplier PO and suggests a transfer instead.
Where AI helps
- Recommending stocking locations from customer geography and order patterns.
Where AI probably doesn’t
A network report and a stocking policy get most of the value.
Before you call it a leak
- Counter customers expect stock on the shelf. Central stocking works for delivered and planned orders, not for walk-ins.
Think this might be happening in your business?
Turn the finding into a next step.
If the numbers say there is something there, send us what you found and we will help you decide whether it is worth a full investigation. No transaction files needed for that conversation.
Related leaks
- Leak 20 · InventorySlow-moving inventoryStock that turns once every three years ties up cash, takes space, and eventually becomes dead. The ERP already knows which items. Nobody has asked it.
- Leak 25 · InventoryPoor inventory transfer decisionsStock shipped between branches to cover a shortage, then shipped back when the shortage is over. Freight both ways, and no one is counting.
- Leak 22 · InventoryExcess safety stockSafety stock set once, by feel, for every item. It protects against a stockout that stopped being likely years ago and ties up cash doing it.
Let’s start with one thing.
What would better performance look like?
Bring a result you want to improve, a symptom, or a workflow you already understand. You do not need to know the bottleneck yet. We’ll help choose what to investigate first.
No transaction files needed for the first conversation.